Now that we’ve crossed over into June, I thought I’d illustrate the price trend relationship between the Hamptons and Manhattan. The former seeing a majority of single family sales and many second home purchases. The latter with a housing market of 98% apartments and single family family sales are a rounding error. Despite the differences in their housing stock, their behavior in terms of price trends has been similar over the past decade…

The Washington Post published an article last year titled “8 in 10 Manhattan home sales are all-cash,” a statement that was (and still is) hyperbole; the actual figure was 45 percent. The data is worth revisiting, though, and I thought it might be a good time to look at the makeup of Manhattan apartment purchases in regards to cash versus financing. Obviously, there has been some confusion in the past, so I thought it would be helpful to display a year’s worth of trend data…

[click to expand chart]

My latest Three Cents Worth column:
Three Cents Worth: How Many NYC Apartments Are Bought With Cold Hard Cash? [Curbed]

For my first Three Cents Worth column on Curbed Ski, I felt compelled to provide a look at one of the priciest ski towns around: Aspen, Colorado. As a real estate analyst and appraiser for nearly 30 years (and a skier, of course!) I have relied on information culled during the research for the quarterly housing market report for Douglas Elliman. In Aspen, the first quarter of 2015 reflected a thorough shift towards larger home sales resulting in large aggregate housing prices gains…

[click to expand chart]

My latest Three Cents Worth column:
Three Cents Worth: Aspen Real Estate Has Had Many Peaks, But It’s Not Peaking [Curbed]

Since Los Angeles is all about relationships and you don’t know me (yet), I thought I’d better get started on my first Three Cents Worth Column for Curbed LA. I’ve been compiling and analyzing data for Douglas Elliman’s market report series for more than 20 years and one thing I’ve learned: there is nothing better than a good chart. For this column I thought I’d explore the relationship between days on market and listing discount and how that is changing…

[click to expand chart]

My latest Three Cents Worth column:
Three Cents Worth: How Much Does It End Up Costing When a House Lingers on the Market in Los Angeles? [Curbed]

A coincident index is a single summary statistic that tracks the current state of the economy. The index is computed from a number of data series that move systematically with overall economic conditions.

As summer comes to a close and many have checked out until Labor Day, I thought I’d try another GIF animation (after the jump!) to illustrate the long fall of inventory (I’m on the “pronounced like ‘Jif’ peanut butter” team, as is the format’s inventor). August generally represents the annual low for inventory (even though fourth quarter of 2013 was quarterly record bottom, August 2013 was the record monthly bottom). I thought I’d show the last decade worth of inventory and provide some context to how low inventory actually is…

With big swings in housing related trends over the past decade, long term patterns are called into question. When a long term trend seemingly changes direction, it is reasonable to point it out. As I opined previously, the housing industry often defaults to linear thinking. It’s not enough to point out a trend, it is better to proclaim that the trend will run indefinitely because consumer tastes have changed.

Here are a few examples of trends in the US housing market that are not trends:

Average New Home Sale Size

[click to expand]

When the housing bubble popped in 2006, shortly after it was pronounced that the multi-decades long trend would reverse it self. Yet the change was a purely short term economic shift as the entry level surged with the sharp decline in mortgage rates. After a few years, the trend of expanding sizes resumed. I’m not saying that the trend will run indefinitely larger, but it is important to look at why the average square foot began to fall in the first place. A harsh economic condition with a rapid rise in affordability prompted in a shift in the mix. And remember, this highly referenced metric reflects new homes which is only about 15% of normalized housing sales.

Perhaps one of the largest misinterpretations of consumer trends has been on the subject of homeownership. As is evident in the chart, the heavily documented push to higher homeownership played was a sudden burst rather than a long term gradual change. The surge in the trend was artificial, based on fraud and unsustainably loose credit conditions that where based on NOTHING. With the multiyear decline, we are beating ourselves up over the decline in the homeownership rate yet we are reverting to the mean since credit is unusually tight. In fact the median homeownership rate of 64.8 over the past 49 years is exactly where we are right now in 1Q14. Will the market overcorrect towards rental? Yes I believe it will until tight credit conditions resume to more historic norms.

Actually, overall Manhattan Home Sales are 45% All-Cash. I want to make sure that the 80% number doesn’t become embedded in our housing market mindset.

[click to expand]

I’ll explain.

Recently a friend passed along a post in the Washington Post titled: 8 in 10 Manhattan home sales are all-cash and my jaw dropped. The author, who I am a fan of, got this information from Realtytrac, who I am also a fan of, but I knew it was either wrong or misinterpreted.

Over the years I’ve played around with NYC mortgage data, usually incomplete and very dirty, from various sources and have combined that with frontline feedback from our own experience as appraisers, as well as from real estate brokers and lenders. I had come to the conclusion that roughly half of Manhattan home sales (co-op, condo & single family) were probably all-cash and condos are definitely well over 50%. I used the logic that foreign and high-end buyers are a large part of the all-cash market, especially within the new development space. And it makes sense – while condo end loan financing is tight, new development condo end loan financing is beyond tight.

The reason the Realtytrac 80% figure jumped out at me was the fact that co-ops account for about 60% of sales and have the highest concentration of entry level and middle class demographics in Manhattan. I was very skeptical that virtually all the market-majority co-op buyers were paying all-cash, especially in the tepid economy we are stuck with.

So I reached out to Daren Blomquist, Vice President at RealtyTrac who is often the point person on their data releases. I indicated that the 80% figure seemed off and wondered if it excluded the co-op market. It didn’t. However even an 80% all-cash share for only single family and condo sales seemed like a stretch. He said he would look into it and within an hour they could see an issue with their co-op data feed. They were already working on the issue (and why I like Realtytrac). He shared their 1Q14 Manhattan information (I omitted the suspect co-op data) and here are the key numbers:

I came up with a new methodology, which looked at the ratios seen in Douglas Elliman sales – the largest real estate brokerage company in Manhattan – with a sales mix is generally consistent with the overall market mix and applied their results to the overall market, and I saw this:

I didn’t have the single family (fee simple) results compiled so I went with Realtytrac’s 73% because: their fee simple (condo) data was consistent with ours, the single family market is skewed much higher price-wise than the condo market (i.e. skewing towards cash buyers) and the single family market share is very small. In fact the market share is so small that the overall 45% all-cash ratio wouldn’t change unless I dropped the single family market share down to 6% from 73% but even then the overall cash ratio would only drop to 44% from 45% – so you get my point (my apologies for the excessive wonkiness on this but it was necessary).

As a result and represented in the table at the top of this post, it is reasonable to say that the overall Manhattan all-cash home sale market in 1Q 2014 was 45% of all residential sales. Got it?

Comments Off on [Infographic] Manhattan Sales Market 1Q14

Follow Jonathan

Newsletter Signup:

If you haven't already, sign up for
'Housing Notes' to receive weekly insights and research.

First Name

Last Name

Email Address

About Jonathan Miller

Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts. He holds the Counselors of Real Estate (CRE) and Certified Relocation Professional (CRP) designations. He is an Appraiser “A” Member of the Real Estate Board of New York and a member of Relocation Appraisers and Consultants, Inc.Learn More...

Subscription Service Coming Soon

You'll be able to choose from an array of robust housing metrics compiled using research developed during the preparation of our market report series. Expanded significantly from prior offerings, use this resource to build charts and custom data tables or leverage your own information for more powerful research and presentations.

In the meantime, here is a small sample of the aggregated data we will provide.

Matrix Blog

Phil Crawford of Voice of Appraisal asked me to cover for him while he took a well-earned vacation. While I don’t have his sweet, syrupy smooth radio voice, I can grow on you a little bit if you listen long… Read More